PPB June 2022

increases today than they were in 1982 because prices are rising across all industries. There’s also much more news coverage, and consumers are more savvy and better informed. Still, inflation is a concern. “Inflation is the kind of thing that can force small businesses into making serious decisions, if it causes more borrowing,” he says. “Small businesses want to remain as liquid as they can.” With inflation forcing prices up, business was good in those days. “I remember boasting to a fellow supplier that we had done all these trade shows and made all these phone calls and increased our business 25%,” Gilman says. “The supplier said his company didn’t do any of those things and his business went up 25%, too.” Bob Waldorf, MAS, who opened Idea Man, Inc. in Los Angeles in 1971, was running a booming business when inflation hovered near 8% in 1982. He recalls prices increasing, defense contracts in his community being eliminated and a steep rise in unemployment. It was an uneasy time. “We had to control our costs to the best of our ability. But when prices went up, we were able to increase our profits,” he says. Geiger remembers how difficult it was to manage costs. He says his manufacturing business was not threatened with going out of business, but it did have to adapt. “We had to use different materials or invent new products that were smaller and allowed us to cut costs. For example, we would put lowerpriced cover materials on our diaries. We’d look at costs and figure out how to adapt our products to keep costs lower, assuming that we couldn’t raise prices.” Ira Neaman, MAS, opened supplier Vantage Apparel in Avenel, New Jersey, in 1977, and found inflation an advantage in that his young apparel company was competing head-to-head with established, publicly traded companies that had earnings expectations. The fact that Vantage didn’t, leveled the playing field. Neaman sees two other big differences in today’s situation compared with 40 years ago. In 1982, almost all industry companies were family owned. Today, about half of the top 40 companies in the industry are owned by private equity, with shareholders and expected rates of return. Second, the inflation rate is today only about 6070% of what it was in 1980-81. “So it’s not at the same level of inflation. We are still cresting—I don’t think we’ve hit the top yet,” he says. He says inflation doesn’t necessarily affect the promo industry because its impact is even across all companies. Instead, he sees interest rates as likely having a greater impact on companies that are borrowing or have expected rates of return. “If interest rates go up, public debt goes up and business and banks are starting to compete for money. The government had 26% debt against the GDP back in 1982, now it’s 138%. “In 2022, our debt is $30 trillion; COVID added $6 trillion to the debt. The government’s ability to fund debt allows inflation to occur, but it’s offset against the amount of taxation that has to occur. Inflation is the silent taxation. That’s the biggest issue. There could be slashing of social programs, entitlement programs may have to be cut or redistributed, etc. We’ve played kick the can for a long time and, at some point, that can is like 50 pounds of paint—you just can’t kick it anymore. The next couple of years are going to look much different than 1980-81.” Despite the headlines about inflation, business owners interviewed for this story agreed that today’s unreliable supply chain is by far the bigger issue. “Disruption and changing prices on customers, or having to explain things to customers who are new, makes life more difficult and increases the distrust between buyer and seller,” Geiger says. “You desire “Inflation is the kind of thing that can force small businesses into making serious decisions, if it causes more borrowing. Small businesses want to remain as liquid as they can.” Mark Gilman, CAS, Gill Studios Rising Inflation | FEATURE | JUNE 2022 | 21